COVID-19 and mining-dependent countries

The contribution of metals and mining to every aspect of our modern world has enabled the production of medicines and PPE. It has also built the communications infrastructure that has allowed us to stay in touch with family, friends and colleagues. The development and implementation of these services, and demand for other services such as energy production from coal, requires a robust industry built on strong foundations that can adapt to the different challenges that may occur now and in the future. For this reason, during the pandemic different mining jurisdictions have given the mining industry essential status to responsibly maintain critical manufacturing and energy services.

Beyond these materials that we all rely on, the mining and metals industry is essential for the health and wellbeing of many resource rich countries, and even more so to those that are resource dependent. In a survey conducted by PwC for ICMM on member payments of corporate income tax and royalties between 2013 and 2017, it was found that companies had paid over US$100 billion to public finances in the 50 countries they operate in. This equated to US$72.5 billion in corporate income tax payments and US$36.3 billion in royalty payments. Other taxes, not included in the total, such as employment taxes and property taxes can also be significant.

Natural resources such as metals and minerals belong to a country’s citizens and extraction of these resources is a catalyst of economic growth and social development in a great many countries. For low and middle-income countries, revenues from the mining sector are particularly important. ICMM’s 2018 ‘Social Progress in Mining-Dependent Countries’ report found that in the 25 countries that are specifically mining-dependent, people are now generally healthier, better educated, and enjoy improved access to affordable and clean energy, water and sanitation, and telecommunications and financial services.

The tax report also notes that growth of the mining sector through new investment improves living standards in some of the poorest countries in the world. In this context, it is essential that the mining and metals industry remain open to fulfil the social need for its products, and to act as a responsible partner of governments in managing the economic cost of COVID-19.

Supporting local businesses

The COVID-19 crisis has put extraordinary pressure on employers and private sector businesses to survive and continue to provide decent work. In addition to dealing with the health emergency, it is essential that every effort is made to provide liquidity to firms, especially SMEs, in order to prevent massive bankruptcies, business failures and unemployment, and to take care of the most vulnerable.

This is important not only in the short term, but also in the medium to long term, to manage the economic recession predicted to follow the pandemic. The right kind of support from ICMM members to local providers is helping to protect decent and productive jobs.

Our company members have already implemented several measures to support local businesses and suppliers.

  • BHP has announced that it will reduce payment terms for small, local and indigenous communities during the COVID-19 crisis in Australia. It will make immediate payments of outstanding invoices. The accelerated payment programme is expected to deliver approximately AU$100 million (US$67.3 million) to its small business partners. BHP will also reduce payment terms for more than 1,100 small Australian businesses. Similarly, South32 is engaging with suppliers to understand the impact on their businesses and work with them to help mitigate this where it can. This includes fast-tracking payments on a case-by-case basis.
  • Gold Field’s South Deep mine in South Africa has also committed to continue to pay small, medium-sized and microenterprise service providers and small-scale contractors the equivalent to ZAR22 million (US$1.25 million) for the period that it is under care and maintenance. Sibanye Stillwater is also supporting local suppliers in South Africa by financing the purchase of ZAR1 million (US$57,000) worth of PPE.
  • Vale has announced a series of support initiatives for small and medium sized businesses affected by the crisis and has advanced BRL521 million(US$103 million) in payments since the beginning of the crisis. The company also plans to advance payments worth BRL411 million (US$82 million) to support 3,000 suppliers across Brazil.

In the context of COVID-19, it has never been more important that the mining and metals industry helps to build local and national resilience through its actions. As the global community responds to the COVID-19 pandemic, ICMM members will continue to support local and national services, both through significant donations to COVID-19 funds and in the delivery of practical support to those in need.

For more information on the actions taken by ICMM company members – visit the ICMM website or download our briefing paper COVID-19: MINING WITH PRINCIPLES TO ADDRESS A HEALTH AND SOCIAL CRISIS.